Option Investor
Newsletter

Daily Newsletter, Thursday, 8/16/2012

Table of Contents

  1. Market Wrap
  2. New Option Plays
  3. In Play Updates and Reviews

Market Wrap

Quiet Market Marches On

by Thomas Hughes

Click here to email Thomas Hughes
Today another round of luke warm economic data was released and the markets carried on. The rally, which seemingly has no end despite the utter lack of conviction, is nearing a three month high. Even at this level the S&P 500 is still trading well within the long term resistance range.



US economic data was basically weak today, although the news (CNBC) tried to put some positive spin on it. Initial jobless claims edged upward, inline with expectations to a seasonally adjusted 366,000. This is up just 2,000 from last weeks number, which was revised up by 2,000 as well. The 4 week moving average of initial claims dropped by 5,500 to 363,750. The last two weeks is a sign that lay-offs are stabilizing but levels are still above the years low and at historic high levels.


Continuing claims for unemployment fell by 31,000 to 3.305 million. The drop puts the number in line with the rest of the summer and reinforces the stable view taken from the initial claims data. The total number of people filing for unemployment also fell, bringing the number to the years low. Recent jobs data supports a continuation in the downtrend of total unemployment even though the unemployment rate has risen in the last few months to 8.3%.



The Philadelphia Federal Reserve survey of business conditions was also released today. The composite reading came in at -7-1%, up from the previous months -12.9%. The reading of -7.1% was well below forecasts for the number. This is the fourth month of negative reading for the indicator but the highest since May. New orders gained the most but still remain in negative territory. The Philly Fed's outlook for the future remains positive but has declined for the past two months. Other headlines from the Philly Fed include “Manufacturers continue to report weak business conditions”, “Lower/Middle Income Household Outlook Deteriorates” and “Forecasters survey sees weaker growth than 3 months ago”.

Housing starts made a surprise dip into negative territory following last months big gain. The number of new houses fell 1.1% in July to 746,000. Economists had been expecting a more robust 765,000. Weaker housing data does suggest the Fed may ease but is conflicting with other data. The biggest drop was in single family homes which fell by 6.5%. The drop was partially offset with a 12% gain in apartment construction. The boom in apartment building underscores the weakness of the housing market. Americans who can't afford to buy, or have no faith in the market, need somewhere to rent.

Bond yields are up. The ten year treasury climbed to 1.8503% and the 30 year rose to 2.969%.

30 Year US Treasury Yield, daily

Asian markets ended the day mixed with the Nikkei climbing higher by 1.88%. The Japanese exporters have been benefiting from a strengthening dollar, expectations of US stimulus and hopes of increased overseas profits. The Japanese automakers helped lead the rally; Toyota gained over 3%, followed by Honda and Mitsubishi.

Toyota Motors, daily

Chinese shares ended their day lower as the country warned that is trade outlook was worsening. Poor corporate earnings and a decline in foreign direct investment helped fuel the decline. The Shang Hai Composite lost -0.32% and the Hang Seng Index lost -0.45%.

European shares ended their day in generally positive territory. The FTSE 100, Xetra DAX and CAC 40 all gained less than 1% but the shining star was Spain's Ibex Index. The Ibex gained over 4% on hopes of bail-out funding. Expectations are high that the ECB will help the country, when and how is only a matter time. Whether or not bail-out efforts will stimulate growth is still debatable, currently economists are expecting that no growth will occur in the Euro Zone until 2013 at the earliest.

Demand for gold has already reached a 2 year low and future expectations are heavily dependent on central bank policy and the Asian economy, especially India and China. Global consumption is down 7% according to the World Gold Council. The decline is led by China and India, spanning industrial, jewelry and investment uses. The declines in India and China are so big that they outweighed a record quarter of central bank purchases of gold.

The Council is expecting demand to pick up in the second half of the year but is basing a lot of the growth on hopes of central bank policy, a rebound in the Asian economy and there was even mention of a Greek Euro exit. The Gold Index climbed over 2% today, trading near a one month high. The index is above a long term support line and the short term moving average but the long term charts are suggesting a bearish triangle pattern.

The Gold Index, daily

Crude oil gained over 1% in today's trading on hopes of stimulus, blah blah and middle east tensions. Crude gapped at the open and continued higher in intraday trading. The price of crude is at 3 month highs and faces significant resistance at the $100 level. The Oil Index made a corresponding move up today but is already trading at resistance. The index has been trading sideways for two weeks, just under the resistance level of 1250.

The Oil Index, daily

An unexpectedly low injection of natural gas helped to support prices today. Natural gas gained about 0.25% in today's trading.

Story stocks today include Apple and Facebook. Apple made fresh headlines concerning its rumored Apple TV project. New speculation has the company teaming up with cable companies to deliver its product to the masses. The stock responded as expected and gained about 0.75% in today's action. The stock is trading just under resistance at the all time high level of $650 per share, is overbought and has weak momentum.

Apple, daily

The lock out on Facebook insiders from selling shares ended today. The shares were down as much as 4.5% in pre market trading and fell below the $20 level soon after the open. The stock trade with heavy volume today and failed to hold above $20 into the close.

Facebook, daily

The earnings front was dominated by the retailers today though there were some notable releases from other sectors. Wal Mart Stores reported in line with the upper end of its guidance, raised guidance on full year earnings, delivered the fourth quarter of comp store increases and still failed to meet investor expectations. Earnings gained over 8% from last year and comparable store sales gained over 2%. The guidance was barely raised, changing from a range of $4.72-$4.92 to a range of $4.82-$4.93. consensus estimates are calling for $4.92 per share which means Wal Mart will have to beat its own estimates in order to produce any form of positive surprise. The stock gapped down below its 30 day moving average on high volume. It also has weakening momentum, convergent with lower prices. The next support zone is at $70, followed by one in the $65-$67 range.

Wal Mart, Daily

Sears is moving the opposite direction, trading up from the 200 day moving average and making a nice white candle. Sears is range bound and likely to remain that way; today's earnings release is sending it up toward the top of the range but it faces resistance at $60, $65 and $70. The company reported a net loss, again, but managed to improve it substantially over last year. Continuing efforts to shift the companies operations are expected to produce further positive impacts to the income statement.

Sears Holding, Daily

Ross Stores reported strong earnings for the second quarter of 2012, on top of strong earnings for the same period last year. Earnings increased by 27% and 20% in the same quarter last year. The company was able to improve sales and margins in the quarter and for the year to date. The stock, which has been trending up and recently formed a potential bull triangle traded up from its 30 day moving average on high volume.

Ross Stores, daily

Cato,which traded down today after its earnings release, is still above support with an upward bias. The company reported net sales dropped by 4% and earnings by 3%. An improvement in margins helped to offset the decline in store traffic. The companies CEO said it was being hurt by negative consumer sentiment and uncertainty over the economy. The company affirmed its full year guidance of $2.18-$2.27 per share, slightly above the consensus $2.21.

Cato, daily

Gap Stores reported after the close but recent price action suggests that expectations were high. Gap gapped up a few weeks ago and is now trading near a ten year high. The store reported a 29% in jump in earnings and lifted its outlook to be more in line with Wall Street expectations. The stock was volatile in after hours trading.

Gap, daily

The Retail Spyder (XRT) moved up today, helping to lift to the general market. The ETF has been range bound since hitting highs in the spring and looks like it is going to retest those highs.

Retail Spyder, daily

Gamestop reported an 11% drop in global sales for the recently ended quarter. The decline was based on an expected slump sales coincident with a lack of new game releases. New business did account for 10% of sales and is expected to be stable. The board of directors approved the dividend and affirmed the previously released guidance. The stock is making a nice bounce from the 30 day moving average and looks strong in the near term.

Gamestop, daily

Lenovo Group, the worlds second largest maker of PC's and traded on the Hong Kong exchange, reported a 30% rise in earnings. In America, the Semiconductor Index responded by gaining over 1.7%, moving up from support at $400 toward resistance at $425.

The Semiconductor Index, daily

I have been reading a lot of articles and interviews lately where estimates for growth are based on expectations of future central bank stimulus and a rebound in global growth. Recent data has raised speculation that the FOMC will not be increasing its efforts at the next meeting while at the same time forecasts for second half growth continue to be muddled. Signs from China point to more slowing and the possibility of more stimulus; Europe is in the middle of stimulus, ready to go with whatever it takes according to Mario Draghi. And through all this the FOMC remains on hold, waiting to see what happens.

Signs of weakness, which is bad for the economy I think, can or will lead to stimulus which is what the market wants. But is that what the market needs? The price of oil is down at manageable levels, the price of gold is down from all time highs, corporate margins are increasing and credit remains at record lows. The building blocks for a recovery are there, we just need a catalyst to spark the growth. Bond purchases won't spark growth, what the markets need is some stability. Fed bond purchasing or other types of quantitative easing will only help to drive the prices of commodities and stocks up on speculation, possibly damaging the economy. We're already facing food inflation due to the drought and the looming possibility of higher taxes come January, higher fuel and other commodities will only hurt the already struggling global marketplace.

S&P 500, daily

The index continues to move up on very light volume, weak momentum and overbought conditions. A look at SPY, the S&P 500 index tracking stock we can see that the ETF is already trading at the spring highs with declining volume and divergent momentum.

SPY, daily

The general market is still drifting upward from Junes bounce but momentum and interest is nearly run out. The reality of corporate earnings in the third and fourth quarter will soon surface and that will ultimately determine the fate of market direction.

S&P, weekly

The VIX is even lower than it was last week on Thursday. The volatility index is below the 5 year range I would expect to see a sharp spike from. This extreme lack of fear seems rather callous in the face of all that is happening in the world. There is a lot to be worried about and future growth seems to built on a house of cards. With the VIX at such an extreme and the S&P so extended I remain on high alert for a pullback in the markets.

The VIX, daily

Be watchful of the Fed but even more watchful of the economic data. In the coming week we will be getting FOMC minutes, homes sales and more jobless data. On the earnings front the week is full but without many significant names.

Until next week, Good trading

Thomas Hughes


New Option Plays

Technology & Industrial Goods

by James Brown

Click here to email James Brown

Editor's Note:

In addition to tonight's new candidate, consider these stocks as possible trading ideas and watch list candidates. Many of these need to see a break past key support or resistance:

(bullish ideas) CRS, SBS, PXD, MOS, ROSE, PM, UTX, FLS, IHS, BIDU


NEW DIRECTIONAL CALL PLAYS

Intl. Business Machines - IBM - close: 200.84 change: +2.44

Stop Loss: 197.40
Target(s): 209.00
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
IBM is one of the biggest I.T. firms on the planet. The company provides everything from hardware to software to services and more. The stock has been consolidating sideways under round-number resistance near $200 recently. Today's move looks like a bullish breakout past resistance.

I am suggesting we buy calls on this breakout (tomorrow morning) with a stop loss at $197.40. Our target is $209.00 since the $210 area has been prior resistance. FYI: The Point & Figure chart for IBM is bullish with a $226 target.

- Suggested Positions -

Buy the Sep $205 call (IBM1222i205) current ask $1.74

Annotated Chart:

Entry on August 17 at $ xx.xx
Average Daily Volume = 3.4 million
Listed on August 16, 2012


Joy Global, Inc. - JOY - close: 55.98 change: +1.51

Stop Loss: 52.75
Target(s): 59.75 & 62.40
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
JOY makes farming and mining equipment. Normally I would be wary of an economically sensitive stock like this with economic data suggesting a slowdown ahead. However, it seems that all the bad news has been priced in. JOY's drop from over $90 back in February to $48 a few weeks ago almost cut the stock in half. Now JOY is has broken out past is trend of lower highs and is retesting prior resistance at the 50-dma as new support. Essentially this new bounce this week looks like a bullish entry point.

I am suggesting positions tomorrow morning with a stop loss at 52.75. Our first target is $59.75. I am setting a secondary, more aggressive target at $62.40 but JOY will have to get past potential resistance at $60.00. FYI: The Point & Figure chart for JOY is bullish with a longer-term $74 target.

- Suggested Positions -

buy the Sep $57.50 call (JOY1222i57.5) current ask $2.43

- or -

buy the Oct $60.00 call (JOY1220j60) current ask $2.31

Annotated Chart:

Entry on August xx at $ xx.xx
Average Daily Volume = 2.1 million
Listed on August 16, 2012



In Play Updates and Reviews

Updating Our Stop Losses

by James Brown

Click here to email James Brown

Editor's Note:

The S&P 500 and the NASDAQ composite are hitting new three-month highs. We have decided it's a good time to update a few stop losses below.

Plus, we've removed COH and ORLY, neither trade was open. IWM has been stopped out. PCYC was triggered.

Current Portfolio:


CALL Play Updates

Amgen Inc. - AMGN - close: 83.10 change: -0.55

Stop Loss: 81.45
Target(s): 88.50
Current Option Gain/Loss: Sep85c: -20.0% & Oct85c: -12.0%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
08/16/12 update: Hmm... what happened to AMGN today. Shares failed to participate in the almost market-wide rally. The larger trend remains bullish.

Earlier Comments:
If you're still looking for an entry point consider that more conservative traders could wait for a new high over $84.40 while nimble traders could try and buy a dip near $82.50 instead.

- Suggested Positions -

Long Sep $85 call (AMGN1222i85) Entry $1.35

- or -

Long Oct $85 call (AMGN1220j85) Entry $2.15

08/15/12 triggered at $83.75

Entry on August 15 at $83.75
Average Daily Volume = 4.8 million
Listed on August 14, 2012


BRCM - Broadcom - close: 36.02 change: +1.31

Stop Loss: 33.25
Target(s): 38.50
Current Option Gain/Loss: +31.1%
Time Frame: 4-6 weeks
New Positions: see below

Comments:
08/16/12 update: BRCM displayed relative strength with a +3.7% gain and a new three-month high. Midday the company announced they were paying a quarterly cash dividend of 10 cents. This new dividend is payable on September 17th to shareholders of record on August 31st.

Readers may want to cinch up their stop loss closer to the $34 level. I am not suggesting new positions at this time.

- Suggested Positions -

Position: Nov $36.00 Call (BRCM1217K36) entry $1.80

08/08/12 new stop loss @ 33.25
no follow through, turning cautious
08/07/12 triggered @ $34.75
08/06/12 adjust stop loss to $32.45

Entry on August 07 at $34.75
Average Daily Volume = 10 million
Earnings Oct-23rd
Listed on Aug 4, 2012


Caterpillar - CAT - close: 88.59 change: +0.98

Stop Loss: 85.90
Target(s): 91.50
Current Option Gain/Loss: + 0.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
08/16/12 update: CAT continues to rebound after yesterday's DE-inspired drop. The next challenge for the bulls is resistance near the $90.00 level. I am not suggesting new positions at current levels.

Earlier Comments:
I do consider this somewhat aggressive. CAT's recent earnings were strong and the company raised guidance but its stock price is probably still vulnerable to negative economic headlines. Furthermore the $90.00 level might be round-number resistance.

- Suggested (SMALL) Positions -

Long Sep $90 call (CAT1222I90) Entry $1.90

08/13/12 new stop loss @ 85.90
08/07/12 triggered @ $87.25

Entry on August 07 at $87.25
Average Daily Volume = 8.6 million
Listed on August 6, 2012


Concur Technologies - CNQR - close: 71.38 change: +1.05

Stop Loss: 68.75
Target(s): 74.75
Current Option Gain/Loss: Sep75c: +16.0% & Nov75c: +2.7%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
08/16/12 update: The rally continues for CNQR. This is a new record high. We are raising our stop loss up to $68.75.

- Suggested Positions -

Long Sep $75 call (CNQR1222i75) Entry $1.25

- or -

Long Nov $75 call (CNQR1217j75) Entry $3.60

08/16/12 new stop loss @ 68.75
08/15/12 triggered at $70.25

Entry on August 15 at $70.25
Average Daily Volume = 577 thousand
Listed on August 13, 2012


Netflix, Inc. - NFLX - close: 64.31 change: +1.05

Stop Loss: 59.45
Target(s): 69.50
Current Option Gain/Loss: + 1.3%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
08/16/12 update: NFLX spent the morning consolidating sideways before finally starting to climb again around lunchtime. The stock opened a $63.46. I don't see any changes from my prior comments.

Earlier Comments:
I do consider this an aggressive trade. NFLX can be volatile. Nimble traders may want to wait and buy calls on a dip in the $62-61 area.

- Suggested (SMALL) Positions -

Long Sep $67.50 call (NFLX1222i67.5) Entry $2.23

Entry on August xx at $ xx.xx
Average Daily Volume = 5.8 million
Listed on August 15, 2012


Pharmacyclics - PCYC - close: 61.61 change: +0.95

Stop Loss: 57.75
Target(s): 67.00
Current Option Gain/Loss: +1.8%
Time Frame: 3 to 6 weeks
New Positions: see below

Comments:
08/16/12 update: We had a trigger to buy calls at $60.85 but PCYC actually opened at $60.94, immediately triggering this trade. If you waited a little bit PCYC provided another dip near $60.50 before moving higher.

The next level of overhead resistance looks like $70 (from years ago). We will aim for $67.00 but more aggressive traders could aim higher.

- Suggested Positions -

Long Sep $65 call (PCYC1222i65) Entry $2.70

08/16/12 triggered on gap open higher @ 60.94

Entry on August 16 at $60.94
Average Daily Volume = 879 thousand
Listed on August 15, 2012


PVH Corp. - PVH - close: 87.56 change: +0.78

Stop Loss: 84.75
Target(s): 91.50
Current Option Gain/Loss: +16.2%
Time Frame: exit prior to the Aug 27th earnings report
New Positions: see below

Comments:
08/16/12 update: Traders bought the dip near $86.00 this morning. PVH managed to briefly trade over $88 before trimming its gains. We are adjusting our stop loss higher to $84.75.

Earlier Comments:
The $90.00 level could be resistance but we will aim for the 2012 highs near $92.00. FYI: The Point & Figure chart for PVH is bullish with a $97 target.

- Suggested Positions -

Long Sep $87.50 call (PVH1222i87.5) Entry $3.27

08/16/12 new stop loss @ 84.75
08/14/12 triggered on gap open at $85.62 (trigger was 85.25)

Entry on August 14 at $85.62
Average Daily Volume = 845 thousand
Listed on August 13, 2012


Qualcomm - QCOM - close: 62.57 change: +0.05

Stop Loss: 60.95
Target(s): 64.50
Current Option Gain/Loss: +33.5%
Time Frame: 4-6 weeks
New Positions: see below

Comments:
08/16/12 update: Hmm... QCOM really did not participate in the market's widespread rally today. Is the good news already priced in? Are shares just tired and need a break? The trend is still up but QCOM might need to correct a little bit. We are raising our stop loss to $60.95. More aggressive traders will want to keep their stop loss underneath the $60.00 level instead.

I am not suggesting new positions at this time.

- Suggested Positions -

Position: Oct $62.50 Call (QCOM1222J62.5) entry $1.70

08/16/12 new stop loss @ 60.95
08/07/12 triggered @ 60.51

Entry on August 07 at $60.51
Average Daily Volume = 1.5 million
Listed on Aug 4, 2012


SBA Communications - SBAC - close: 60.53 change: -0.91

Stop Loss: 58.95
Target(s): 64.90
Current Option Gain/Loss: Sep60c: -15.7% & Dec65c: -11.5%
Time Frame: 4 to 8 weeks
New Positions: see below

Comments:
08/16/12 update: SBAC was downgraded from a "buy" to a "neutral" this morning. The stock reacted by spiking down to $59.39 but managed to recover pretty quickly. Unfortunately the September calls did not recover that much and are still down sharply on the session. The stock closed with a -1.48% decline. We are raising our stop loss up to $58.95. I am not suggesting new positions at this time.

Our multi-week target is $64.90. We might need some patience on this one. SBAC doesn't move super fast. FYI: The Point & Figure chart for SBAC is bullish with a long-term $100 target.

- Suggested Positions -

Long Sep $60 call (SBAC1222i60) Entry $1.90

- or -

Long Dec $65 call (SBAC1222L65) Entry $1.30

08/16/12 new stop loss @ 58.95
08/14/12 triggered @ 60.75

Entry on August 14 at $60.75
Average Daily Volume = 1.5 million
Listed on August 11, 2012


WellPoint Inc. - WLP - close: 57.84 change: +0.04

Stop Loss: 55.85
Target(s): 59.75
Current Option Gain/Loss: +21.8%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
08/16/12 update: The stock market's broad-based rally today was not enough to push WLP past resistance at the $58.00 level. We are raising our stop loss to $55.85.

I am not suggesting new positions at this time.

- Suggested Positions -

Long Sep $57.50 call (WLP1222I57.5) Entry $1.60

08/16/12 new stop loss @ 55.85
08/08/12 triggered @ 56.50

Entry on August 08 at $56.50
Average Daily Volume = 4.4 million
Listed on August 7, 2012


PUT Play Updates

Edwards Lifesciences - EW - close: 97.80 change: -0.38

Stop Loss: 100.25
Target(s): 91.50
Current Option Gain/Loss: -24.0%
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
08/16/12 update: EW is still underperforming the market. Shares lost -0.38% today and remain under resistance near $100. Given the market's recent strength I am not suggesting new positions at this time.

- Suggested Positions -

Long Sep $95 PUT (EW1222u95) Entry $2.70

08/13/12 trade opened on gap down at $97.66 (trigger was 97.75)

Entry on August 13 at $97.66
Average Daily Volume = 950 thousand
Listed on August 9, 2012


FB - Facebook - close: 19.87 change: -1.33

Stop Loss: 23.25
Target(s): 17.00
Time Frame: 2-4 weeks
Current Option Gain/Loss: + 3.4%
New Positions: see below

Comments:
08/16/12 update: As expected shares of FB dropped following the expiration of its latest stock lock up period. The close under round-number support at $20.00 is bearish.

Earlier Comments:
Facebook has turned into the stock everyone loves to hate. Facebook has 674 million shares outstanding as of Friday. On August 15th another 268 million shares will see their lockup expire and become available for trading. That is 40% additional shares. If you were an investor or employee and you watched your shares decline from $35 to $20 ahead of your lockup expiration you are probably just waiting for an opportunity to sell. Another factor is that taxes are due on the awarded shares regardless of whether they are sold. That means employees have a big tax bill and they have not been able to sell those shares to pay the taxes. That is an additional incentive to pull the trigger on at least part of their position on August 15th.

Facebook has hundreds of detractors and they seem to be racing each other trying to put a lower price target on the stock. Mark Hulbert was on CNBC on Friday with a $13.80 price target based on a bunch of different metrics.

Facebook also has the various lawsuits over the IPO including the valuation and the various claims made about users and revenue in the days leading up to the IPO. There are plenty of clouds and no real catalysts to pump up the stock.

Facebook said expenses grew by 60% in Q2 and they would grow faster in Q3/Q4. That means earnings will decline.

I am recommending a September option with plans to exit (some time) after the August 15th share lock up expiration.

Suggested Positions

current position: Sept $20 PUT (FB1220U20) entry $1.45

08/07/12 triggered @ 20.95
08/06/12 adjust entry trigger to $20.95

Entry on August 07 at $20.95
Average Daily Volume = 80.0 million
Listed on August 5, 2012


CLOSED BEARISH PLAYS

Coach, Inc. - COH - close: 56.83 change: +1.18

Stop Loss: 56.05
Target(s): 50.15
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: see below

Comments:
08/16/12 update: With the market in rally mode suddenly COH is showing more strength. The stock outperformed today with a +2.1% gain. We are dropping COH as a candidate. Our trade did not open.

Our trade did not open

08/16/12 removed COH from the newsletter. trade did not open.

chart:

Entry on August xx at $ xx.xx
Average Daily Volume = 6.8 million
Listed on August 14, 2012


iShares Russell 2000 ETF - IWM - close: 81.14 change: +0.84

Stop Loss: 80.75
Target(s): 76.50
Time Frame: 3-5 weeks
Current Option Gain/Loss: -23.0%
New Positions: see below

Comments:
08/16/12 update: As I feared yesterday, the IWM has continued to rebound. Now this small cap ETF looks like it's breaking out. Our stop was hit at $80.75.

Our plan was to keep our position size small to limit our risk.

- Suggested (SMALL) Positions -

Oct $78 PUT (IWM1220V78) Entry $2.60 exit $2.00 (-23.0%)

08/16/12 stopped out at $80.75
08/13/12 triggered @ 79.40
08/08/12 Adjust entry/stop/exit
Use a trigger @ 79.40, stop @ 80.75, target 76.50. Small Positions Only!
08/07/12 adjust trigger to buy puts up to $78.90

chart:

Entry on August 13 at $79.40
Average Daily Volume = 60.0 million
Listed on August 5, 2012


O'Reilly Automotive - ORLY - close: 87.21 change: +2.26

Stop Loss: 84.75
Target(s): 80.25
Current Option Gain/Loss: Unopened
Time Frame: 3 to 4 weeks
New Positions: Yes, see below

Comments:
08/16/12 update: The market's strength has shorts on the run and ORLY surged +2.6%. Shares have broken one of its bearish trends of lower highs. We are dropping ORLY as a candidate. Our trade never opened.

Our trade did not open.

08/16/12 removed from the newsletter. trade did not open.

chart:

Entry on August xx at $ xx.xx
Average Daily Volume = 1.5 million
Listed on August 11, 2012